Swiss America Blog Archive

8.22.16 - Is the central bank crying wolf?

Gold last traded at $1,343 an ounce. Silver at $18.85 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Monday on a flat dollar and Fed speculation. U.S. stocks drifted lower as oil prices shed 3% and all eyes turn to conjecture regarding the content of Yellen's Friday speech.

It could be a tough week for Janet Yellen -Forbes
"Fed Chair Janet Yellen has the tough task in the week ahead of speaking to markets that are looking for more guidance than she may be able to provide. Yellen's speech in Jackson Hole, Wyoming, on Friday has been anticipated for weeks, and especially in the last several days after Fed speakers suggested the Fed could raise rates as early as September....'I wish we had a Fed speak [volatility index]. I'm telling you it just spiked through the roof. It's all over the map. I'm confused about what they're trying to do,' said James Paulsen, chief investment strategist with Wells Capital Management. 'We've got people talking out of every side of their mouth. The Fed VIX is at its highest ever.'"

When will The Biggest Bank Heist in History ever end? Stay tuned...

Yellen wolf The central bank that cried wolf? Talk of higher U.S. interest rates is often just that -Marketwatch
"Two years ago, a prominent central banker suggested interest rates could rise 'sooner than you think' after an unprecedented five-year stretch of easy money. Earlier this week New York Federal Reserve President William Dudley issued a similar warning to financial markets.... The U.S. central bank is more likely than not to raise interest rates before the end of 2016, but the timing is still an open question. Dudley strongly implied a rate hike could come as soon as September....Yet the Fed has been on the cusp of rate hikes several times since 2013 — recall the famous taper tantrum — and it seemed on the verge of acting just last spring before backing off....A problem for the Fed, though, is that raising rates could strengthen the dollar at a time when most central banks are doing like the Bank of England and cutting them."

James Grant: "This Will Turn Out To Be Very Bad For Many People" -Zero Hedge
"From multi-billion bond buying programs to negative interest rates and probably soon helicopter money: Around the globe, central bankers are experimenting with ever more extreme measures to stimulate the sluggish economy. This will end in tears, believes James Grant. The sharp thinking editor of the iconic Wall Street newsletter Grant’s Interest Rate Observer is one of the most ardent critics when it comes to super easy monetary policy. Highly proficient in financial history, Mr. Grant warns of today’s reckless hunt for yield and spots one of the biggest risks in government debt. He’s also scratching his head over the massive investments which the Swiss National Bank undertakes in the US stock market....According to Grant, 'Gold is money and money is sterile, as Aristotle would remind us. It does not pay dividends or earn income. So keep in mind that gold is not a conventional investment. That’s why I don’t want to suggest that it is the one and only thing that people should have their money in. But to me, gold is a very timely way to invest in monetary disorder.'"

As usual, James Grant is spot on in his articulation of both the present "reckless" economic environment and the simplest solution; come to grips with the reality that gold is money. It's liquid worldwide, a proven store of value and the antidote to accelerating monetary disorder. Read our 2016 Gold Report - World Edition.

How This Hedge Fund Robot Outsmarted Its Human Master -Bloomberg
"Yoshinori Nomura felt like weeping. It was the morning of June 24, Brexit day, and markets were moving against him....Then, in an instant, everything changed. When new vote counts signaled Britain was going to leave the European Union, a burst of selling sent Japanese shares to their biggest drop in five years. By luck or design, Nomura’s Simplex Equity Futures Strategy Fund ended the day with a 3.4 percent gain, one of its best results in three months of trading. 'The machine was right after all,' said Nomura, who spent more than three years refining his trading program and now oversees about 3.5 billion yen ($35 million) in the fund, one of the first in Japan to utilize artificial intelligence technology.... 'As every day goes by, the machine becomes more intelligent. It’s going to be a brave new world.'"

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8.19.16 - Facebook Likes the Gold Standard

Gold last traded at $1,346 an ounce. Silver at $19.31 an ounce.

NEWS SUMMARY: Precious metal prices eased back Friday as the dollar bounced on hawkish Fed comments. U.S. stocks fell as oil prices rose; utilities and telecommunications dropped over 1 percent and investors digested Fed speak.

Fed guessing game moves up a gear as Yellen takes stage -Reuters
"The debate over whether the U.S. Federal Reserve is readying an interest rate hike will get its umpteenth airing over the coming week, with all eyes on Chair Janet Yellen to provide some clarity. Amid conflicting signals from the Fed in recent days, central bankers from around the world will gather from Aug. 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Yellen due to speak the following day....Uncertainty over its position now has knocked the U.S. dollar, leaving it close to eight-week lows against the euro. New York Fed President William Dudley, a close ally of Yellen's, was among those sounding a more confident note in recent days on a possible near-term rate hike, citing broad progress in the U.S. economy."

Fed cartoon The Facebook Dollar -New York Sun
"The Federal Reserve has just launched an official page on Mark Zuckerberg’s Web site, and at first glance it looks like the Fed is entering new territory. The lead item, as of our last check, is a biographical note in respect of the chairman, Janet Yellen. The first comment on it is about how if a person mounts a protest onto property of a Federal Reserve Bank, the bank will 'instruct the police' to arrest him. 'Proof,' the commenter says, 'that they own private property.' 'If she had a real job she would have been fired long ago,' writes another commenter about Mrs. Yellen. 'Can’t keep being wrong and not doing what you say you are going to in a real job [and] not suffer consequences.' Another demands: 'When are you going to stop the FRAUD of counting the debt based credit generated by the Fed and the banking system as being a U.S. legal tender money?' Writes another: 'Congrats, Knuckleheads, on creating, inflating, and perpetuating the largest asset bubble in history.'....What an irony - Facebook likes the gold standard."

Toward Stagflation - The Real End Game For Central Banks -Zero Hedge
"Negative real interest rates have been instrumental in goosing the housing market after its near-death experience in 2009....Please note that Norway is heading straight into stagflation and at some point Norges Bank will be forced to tighten monetary policy into a weakening economy. The world should take note, because the real end game for central banks will come when they are constrained by rising inflation in a weakening economy. We all know what happened after the 1970s stagflation; and hiking rates to 20 per cent in an overleveraged world is a lot harder than it was back then. The small vulnerable economies will go down this route first, with the likes of Norway, Australia and Canada already struggling. While they are still on the side of monetary accommodation, that could change abruptly as exchange rates depreciate and inflation takes hold, just as their commodity dependent housing bubbles bursts and drags economic activity down with it; larger, more diversified, economies will be next."

Is greed good? No, it’s seriously bad for your wealth -Financial Times
"Avarice, the love of money, is one of the seven deadly sins. Throughout world cultures, the belief is deep that avarice is an evil, to be avoided. But there is also a noble intellectual tradition that holds that it is good for the economy. For the Scottish enlightenment thinker David Hume, it was ‘the spur of industry’ - which helped to drive the ‘invisible hand’ of the market as discovered by his fellow countryman Adam Smith. More recently, and bluntly, Michael Douglas’ character Gordon Gekko in the film Wall Street, declared that ‘greed is good’....Fresh international research, produced under the auspices of State Street’s center for applied research, suggests that greed is not good after all. In fact, avarice can be seriously bad for our wealth."

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8.18.16 - Is the Fed Committing Economic Treason?

Gold last traded at $1,357 an ounce. Silver at $19.74 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday as Fed minutes cooled rate hike prospects and weighed on dollar. U.S. stocks inched higher on surging oil prices.

Irrational exuberance begins to surface in US stock market -Financial Times
"Resting hopes for US stocks on higher earnings growth is a bet against recent history. Markets are extravagantly confident that brokers are too bearish, and that their profit forecasts for US companies are too low. The multiple of 18 times next year’s projected earnings at which the S&P 500 currently trades, according to Bloomberg data, allows little other interpretation. It is at its highest since 2002, outstripping any level it reached during the credit bubble, or when the Federal Reserve was pumping up asset prices with QE bond purchases....And companies that take a lead in buying back their own stock are also underperforming after years of outstripping the market....Put all these together, and the highest prospective earnings multiples since the dotcom boom look like irrational exuberance.”

debt The Federal Reserve’s Cycle of Monetary Insanity (and Treason) -Sprott Money
"In 2008; the central bankers of the West went berserk with their monetary crimes. Interest rates were driven to near-zero. Money-printing was driven to near-infinity, as represented by the Bernanke Helicopter Drop. As a condition for engaging in monetary policies which were more insane (i.e. more criminal) than anything ever done in our economies; the central bankers promised an immediate Exit Strategy, in early 2009. Through the middle of 2016; we’re still waiting....Economies are built exclusively upon sound fiscal policies, and the first and most important principle of sound fiscal policy is that monetary policy can never be allowed to dominate fiscal policies... Infinitely expanding monetary policy is just as obviously suicidal as the Keynesian doctrine of infinitely expanding debt. This brings us to the conclusion (in the title) that the Federal Reserve’s present monetary insanity can only be a program of intentional economic treason."

Is the Fed insane, negligent or outright treasonous? You be the judge after reading our White Paper on the subject, The Biggest Bank Heist in History.

Banker Who’d Revolutionize Money Says It Can Be Done From Within -Bloomberg
"Frank Breitenbach would like to pull apart the global financial system, while he’s still in it. And then put it back together again, only this time without credit bubbles, crises and bailouts...Remove from banks the power to create money, and give it back to the state....Commercial banks would be required to back their loans 100 percent with deposits - whether they come from savings, capital or their own borrowings. In other words, lenders would be barred from creating money out of nothing - an inherent attribute of the fractional-reserve banking model that’s been dominant since the Middle Ages.”

This proposal from Mr. Breitenbach is a familiar populist-proposed solution to fix the broken fractional reserve banking system. The problem is that unless gold is backing deposits, moving the power to "create money" to the state would make things even worse. (Imagine Obama with an unlimited checkbook). The world had a stable banking system when it functioned on a gold standard. Meanwhile, the most practical solution is to put yourself on a personal gold standard as we discuss in The Timeless Truth About Gold & Silver.

Who Would Win a Currency War? No One -Bloomberg
“It's been a year since a sudden, 1.9 percent decline in the Chinese yuan rattled global markets and prompted fears of a global currency war. China has mostly soothed nerves by moderating the renminbi's swoon since then. But what should really put minds to rest is the knowledge that no one - not even China, which arguably did power its rise, at least in part, on the back of an artificially depressed yuan - could win a true currency war today....First and foremost, devaluation holds out the promise of boosting exports by making them less expensive....It's not clear, however, that this strategy of implicit devaluation can achieve any wider benefits. For one thing, a weaker currency no longer guarantees an increase in exports. External demand remains sluggish because of the slowdown in global growth. Trade growth has slowed sharply since 2014.”

Stagnant wages, skyrocketing debt, currency devaluations and a rising real rate of inflation are the Fed's legacy. What's coming next in the ongoing global currency war? Find out in our 2016 World Money Report.

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8.17.16 - Markets Ignore Fed Speak

Gold last traded at $1,348 an ounce. Silver at $19.70 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Wednesday despite a slightly higher dollar. U.S. stocks inched above flat line following the release of the minutes from the Fed's July meeting.

Gold likely to average $1,475 an ounce during Q4 2016 -Scrape Register
"Credit Suisse has reiterated its late-June outlook that gold will rise to $1,475 in the fourth quarter. The view was included in a research note citing highlights from the World Gold Council’s report this week on quarterly demand trends, which showed that second-quarter demand rose from a year ago. Credit Suisse said in its outlook is 'primarily due to continued investment demand through ETF (exchange-traded-fund) purchases and bar/coin hoarding on prolonged macro uncertainty and negative real interest rates – (with) 39% of sovereign debt traded with a negative rate on July 27th -- along with our view for declining mine supply.'"

Each day financial analysts and forecasters grow more bullish on gold prices - which are already up over 25% this year. Credit Suisse now thinks gold prices will rise another 10% by year end. Now is the time for action. It you are still unsure, please read our 2016 Gold Report - World Edition.

financial markets Forget the stock rally, investors are holding cash -CNBC
"While the current run in the global equity markets has seen some investors enjoying the highs, there are still a number of investors who prefer to hold on to cash or invest in other alternative forms of investment. A survey conducted by Bank of America Merrill Lynch last month found that cash levels were at 5.8 percent of portfolios and at the highest levels since November 2001....A further piece of research from Wealth-X Billionaire Census showed that the world's billionaires are holding more than $1.7 trillion in cash....'Holding cash is surely a bad sign for investor confidence but it is perfectly rational,' Alastair Winter, chief economist at Daniel Stewart told CNBC via email. 'It's one of the early signs that a market is looking overextended as moves are simply not being backed up with volume.'"

In the next crisis, we suspect gold will be become the real monetary king worldwide. Why? Because gold alone functions as honest money due to its unique combination of; scarcity, liquidity, portability and most importantly, an intrinsic store of value. Cash on the other hand is under attack today by governments and the banking system, as we detail in our White Paper: The Secret War on Cash.

Global central banks dump U.S. debt at record pace -CNN Money
"In the first six months of this year, foreign central banks sold a net $192 billion of U.S. Treasury bonds, more than double the pace in the same period last year, when they sold $83 billion. China, Japan, France, Brazil and Colombia led the pack of countries dumping U.S. debt. It's the largest selloff of U.S. debt since at least 1978, according to Treasury Department data. 'Net selling of U.S. notes and bonds year to date thru June is historic,' says Peter Boockvar, chief market analyst at the Lindsey Group, an investing firm in Virginia."

America to hand off Internet in under two months -Washington Examiner
"The Department of Commerce is set to hand off the final vestiges of American control over the Internet to international authorities in less than two months, officials have confirmed....The move means the Internet Assigned Numbers Authority, which is responsible for interpreting numerical addresses on the Web to a readable language, will move from U.S. control to the Internet Corporation for Assigned Names and Numbers, a multistakeholder body based in Los Angeles that includes countries such as China and Russia.....Critics of the move, most prominently Texas Republican Sen. Ted Cruz, have pointed out the agency could be used by totalitarian governments to shut down the Web around the globe, either in whole or in part."

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8.16.16 - GOLD: Monetary Policy Medicine

Gold last traded at $1,356 an ounce. Silver at $19.87 an ounce.

NEWS SUMMARY: Precious metal prices rushed higher Tuesday on safe haven buying and a sharply weaker dollar. U.S. stocks retreated from recent highs as investors pondered Fed comments on ending their failed easy money policy.

Buy physical gold; central banks are on its side, Jim Rickards says -CNBC
"Gold prices can go nowhere but up as central banks around the world try their utmost to spur inflation, author and gold market expert Jim Rickards said Monday. 'Every central bank in the world says they want inflation...they've come nowhere close...but that just means they are going to keep on trying; central banks cannot allow deflation because it increases the real value of debt...they are not going to rest until they get it,' The James Rickards Project director told CNBC's 'Squawk Box' on Monday.... Rickards, who is recommending investors to hold 10 percent of their portfolios in gold, did not give a price forecast....'When everyone wants to convert their paper to physical (gold)...there's not going to be enough to go around,' Rickards said."

What percentage of your savings are you holding in physical gold? If the answer is less than 5%, you may be well advised to at least double it this year, as Mr. Rickards and others suggest. As public faith in central banks, paper currencies and government leadership continues to erode, you will sleep better at night knowing your wealth will survive (and even thrive) in today's untrustworthy financial world. Take a moment to request our free report, The Timeless Truth About Gold & Silver.

gold money Gold's Run Far From Over, Experts Say -The Street
"Gold has been on a tear in 2016, surging 26% and hitting a two-year high of $1,357 an ounce in July....But can the run in gold and gold-related stocks and ETFs continue much longer? Experts say hang tight, because the ride isn't over yet. 'I think we're still in the early innings,' said Axel Merk, president and chief investment officer at Merk Investments. 'I wouldn't be surprised to see $1,400 for the price of gold by the end of the year or even by October.'....At least one fund manager believes gold will even surpass its 2011 all-time high of $1,921, although it could take several years, and a few setbacks and selloffs along the way, to get there. 'I think we're going to break that high,' said Doug Groh, a portfolio manager at Tocqueville Asset Management and Tocqueville Gold Fund."

Central banks 'don't give a darn' about retirement savers -CNBC
"The idea of central banks creating wealth by boosting asset values through low or even negative interest rates may prove costly for retiring Americans and those saving for their golden years, AIG Chief Investment Officer Doug Dachille told CNBC on Tuesday. Dachille, head of the insurer's massive $351 billion investment portfolio, said 'all savers' are being negatively affected by easy monetary policies around the globe....'We're not sure there's a wealth effect from putting all rates at negative or zero,' Dachille said."

The entire global monetary and banking system is built upon public trust. This trust is in a sharp decline today because savers have been punished with zero or negative returns for nearly a decade. We suggest moving a portion of your savings outside of the banks entirely into the world's most trustworthy money - gold. Learn more about safe money tips in The Secret War on Cash.

The great achievements of capitalism have primarily benefited the ordinary citizen, not the wealthy -AEI
"In Milton and Rose Friedman’s classic book Free to Choose: A Personal Statement they made the following point: 'The great achievements of Western capitalism have redounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.' It’s an important and powerful insight that a disproportionate share of the benefits of capitalism, free markets, innovation, new products, trade, and technological advances go to the average person, and not to the wealthy as progressives like Hillary Clinton and Bernie Sanders would have us believe....Think about how wrong the progressive view is the next time you use your laptop, your smartphone, your GPS, SoundHound or Spotify, or take a ride using Uber or Lyft."

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8.15.16 - Negative Yields: A Race to the Bottom

Gold last traded at $1,347 an ounce. Silver at $19.84 an ounce.

NEWS SUMMARY: Precious metal prices traded higher Monday amid rising commodity prices and a weaker dollar. U.S. stocks rose as investors cheered higher oil prices.

Why gold is about to break out: Trader -CNBC
"Gold has already rallied 28 percent in 2016, but according to one trader the charts are pointing to a new wave of momentum for the commodity. 'We're in the next uptrend,' noted CNBC 'Fast Money' trader Brian Kelly during a 'Behind the Trade' special. 'This uptrend has bounced several times. That's very positive price action.' From here, Kelly believes the excitement that has led to recent gains can be credited to two key factors: negative interest rates and the dollar. 'The U.S. dollar has been relatively weaker,' Kelly said.

Negative rates are changing the financial rules. Have you adapted your portfolio to this brave new negative return world? If not, please don't wait to diversify your savings and retirement. Read our three Special Reports on Gold, Silver and Money.

growth "It’s Surreal" - Negative Yielding Debt Rises To Record $13.4 Trillion -Zero Hedge
"About a quarter of the global economy now has negative interest rates. 'It’s surreal,' said Gregory Peters, senior investment officer at Prudential Fixed Income and Morgan Stanley's former chief global asset strategist, who two months ago was one of the very few to predict the market's reaction to Brexit when he said that the market was looking at it wrong and urging to 'Buy US Assets In Case Of Brexit.' Regarding negative yields he added that 'It’s clear that central banks are dominating markets. There’s a race to the bottom. Central banks are the main drivers of this, it’s not fundamental.' Money is also spilling into the global stock market, helping the FTSE All-World index to a 5.3 per cent gain this year and pushing all three main US equity indices to a 'trifecta' of fresh records this week. Some investors and analysts are starting to fret that the swelling universe of negative-yielding bonds is distorting global markets and causing more economic damage than gains."

Negative yields - now at the lowest worldwide since 2,000 B.C. - are grossly distorting reality. This anomaly helps explain why the U.S. economy looks stagnant, yet U.S. stock prices miraculously just keep reaching for new highs. The current pre-election party on Wall Street will not end well; according to those in the know. Now is the time to take some profit and move it into real money - which stands to rise regardless of who is elected.

The Stimulus Wore Off. What Now? -Real Clear Markets
"A great mystery of our time - one that should frame the campaign debate - is why the economic recovery has been so sluggish....Since the Depression, economists had supposedly acquired the knowledge to avoid deep slumps and feeble recoveries. So we thought. This failure has led to a search for explanations and villains. The latest contribution is from Josh Bivens of the left-leaning Economic Policy Institute. His study asks why the recovery is taking so long. The answer, he says, is not enough government spending....If there's too little demand, government should create more. Still, there's room for skepticism. For starters, the argument that robust government spending fueled fast recoveries in the past may be backward. The causation may have run in the other direction: Strong recoveries may have raised spending, as tax receipts surged and government spent the inflows....What's distinctive about today's economic situation is that the problem is global."

The brave new world of robots and lost jobs -Washington Post
"Job insecurity is a central theme of the 2016 campaign, fueling popular anger about trade deals and immigration. But economists warn that much bigger job losses are ahead in the United States - driven not by foreign competition but by advancing technology....The deeper problem facing the United States is how to provide meaningful work and good wages for the tens of millions of truck drivers, accountants, factory workers and office clerks whose jobs will disappear in coming years because of robots, driverless vehicles and 'machine learning' systems....The 'automation bomb' could destroy 45 percent of the work activities currently performed in the United States, representing about $2 trillion in annual wages, according to a study last year by the consulting firm McKinsey & Co....White-collar workers may imagine that they’re safe, but that’s wishful thinking. If computers can be programmed to understand speech as well as humans do, 66 percent of jobs in finance and insurance could be replaced, the most recent report says."

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8.12.16 - Gold's Scarcity Driving Price Rally

Gold last traded at $1,343 an ounce. Silver at $19.70 an ounce.

NEWS SUMMARY: Precious metal prices zig-zagged Friday after speculators reportedly sold $5 billion in gold contracts at once. U.S. stocks retreated from all-time highs following disappointing retail sales data.

Gold Rally Reignited as U.S. Data Signal Lower-for-Longer Rates -Bloomberg
"Gold futures headed for the biggest gain in eight sessions after government data showed U.S. retail sales stalled in July, prompting traders to reduce bets that the Federal Reserve will raise rates by the end of the year....Bullion has climbed 28 percent this year amid speculation U.S. policy makers will be slow to boost borrowing costs, while central bankers around the world take steps to support economic growth....'Retail sales are flat and there’s so many other areas of the economy that are flat,' Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. 'It’s hard to justify a rate hike, given the slow global growth...'"

In the short-term, gold prices can be artificially driven downward by a concerted sell-off by speculators, but fundamentals always win in the end. This is why it is vital to resist the temptation to make snap decisions based on the daily gold price. Always keep the big picture in mind, which clearly illustrates precious metals are the world's safe haven over the long-term. Discover why 2016 is the year to 'go for the gold' in our 2016 Gold Report - World Edition.

gold Gold Can Really Get Expensive If Miners Don't Start Digging Up More of It -Forbes
"The yellow metal’s rarity, of course, is one of the main reasons why it’s so highly valued across the globe and, for most of recorded history, recognized and used as currency. Unlike fiat money, of which we can always print more, there’s only so much recoverable gold in the world. And despite the best efforts of alchemists, we can’t recreate its unique chemistry in a lab. The only way for us to acquire more is to dig, but for how much longer? Goldman Sachs analyst Eugene King took a stab at answering this question last year, estimating we have only ‘20 years of known mineable reserves of gold.’”

Investment demand for gold jumps to all-time high -Mining
"According to the World Gold Council's Gold Demand Trends report covering the first half of 2016, ETF investors who've been stocking up on the yellow metal right out of the gate this year continued to pour money into gold ETFs in the second quarter. Frenzied investment demand were behind the best ever first half for the metal topping the first six months of 2009 when investors in the throes of the global financial crisis sought the safe haven of gold. Investment demand of 1,064 tonnes accounted for almost half of overall gold demand during the first six months of 2016 and it was the first time on record that investment has been the largest component of gold demand for two consecutive quarters.”

In Illinois, the Blue-State Model Rolls toward Bankruptcy -Will/National Review
"Deficits and unfunded pension liabilities as far as the eye can see. Chicago - Seated in his office here, wearing neither a necktie nor a frown, Republican governor Bruce Rauner is remarkably relaxed for someone at the epicenter of a crisis now in its second year and with no end in sight. But, then, stress is pointless when the situation is hopeless. Besides, if you can ignore the fact that self-government is failing in the nation’s fifth-most populous state, you can see real artistry in the self-dealing by the Democrats who, with veto-proof majorities in the state legislature, have reduced this state they control to insolvency. Illinois’s government, says Rauner, 'is run for the benefit of its employees.' Increasingly, it is run for their benefit when they retire. Pension promises, though unfunded by at least $113 billion, are one reason some government departments are not digitized at all....Illinois is a leading indicator of increasing national childishness - an unwillingness to will the means for the ends that it wills. Nationally, state and local governments’ pensions have somewhere between $1 trillion and $4 trillion in unfunded pension liabilities, depending on, among other things, assumptions about returns on pension funds’ investments."

Detroit, Baltimore and now Chicago are all financial train wrecks thanks to progressive, big-government deficit spending. In The Great Withdrawal, Craig R. Smith and Lowell Ponte examine how and why Detroit went bankrupt in 2013 and why other major U.S. cities are on the same road to insolvency. They also explain the coming great withdrawal from the banking system and how to protect yourself now.

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8.11.16 - Solving the US Productivity Puzzle

Gold last traded at $1,350 an ounce. Silver at $20.02 an ounce.

NEWS SUMMARY: Precious metal prices consolidated recent gains Thursday on a slight dollar rebound. U.S. stocks traded higher as investors digested quarterly results from retail companies, economic data and rising oil prices.

The Great Productivity Puzzle -New Yorker
"In the United States over the past twenty years the tight relationship between productivity growth and wage growth has broken down. Wages have slipped behind productivity....The new data showed that productivity in the non-farm business sector of the U.S. economy - i.e., most of it - has declined for the third quarter in a row. That’s the longest falling streak since 1979, and, unfortunately, it isn’t merely a statistical blip....Since 2007, the annual rate of productivity growth has averaged about 1.3 per cent. Since 2010, it has been even lower, about 0.5 per cent....The key question is where we go from here?"

Unless U.S. economic growth and productivity greatly improve - and fast - where we go from here is a dark place called stagflation. Stagflation is the worst of all economic worlds; stagnant wages and growth coupled with an increasing cost of living. This is yet another example of the perfect storm that's helping to propel precious metal prices higher this year, and this decade. Add rising debt and bloated government regulations and it's no wonder the American dream is slowly dying. Learn more about how to restore the American Dream in our latest book, We Have Seen The Future and It Looks Like Baltimore- (Free Summary!)

CHART OF THE DAY: Poking the Productivity Bear -HedgeEye
"Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. '... As we've highlighted in the Chart of the Day, productivity, which is a proxy for the goods and services produced each hour by Americans, has now declined for three straight quarters. As the chart shows, productivity declined both sequentially and year-over-year. This was also the first time since 1979 that productivity has declined for three quarters in a row.'"

productivity chart

This trend tells you everything you need to know about America’s future -Sovereign Man
"Just this morning the US government published an extra 227 pages of rules, regulations, and proposals. This happens every single business day in America. Last week the government published over 2,000 pages of new rules, many of which border on absurdity. To give you an idea, USDA’s Agricultural Marketing Service proposed a rule about minimum and maximum diameters of potatoes that are sold in the State of Colorado. Needless to say, the more of these rules they create, the more difficult it becomes for people and businesses to produce. So it wasn’t exactly a big surprise when the US Labor Department released statistics a few days ago showing that, for the third straight quarter in a row, productivity in the Land of the Free declined. In other words, US workers are producing less than they did before. America is going backward. But there’s another side to this story. Because while US economic growth has practically halted and productivity is shrinking, DEBT CONSUMPTION is up. Way up....It’s not hard to see where this trend is going."

Fear Not, the Federal Reserve’s Relevance Is Declining by the Day -LibertyLawSite
"'The sole use of money is to circulate consumable goods.' – Adam Smith. In a recent op-ed for the Wall Street Journal, Morgan Stanley economist Ruchir Sharma observed that while the world is seemingly 'turning inward,' this comes 'in a period when countries are more beholden than ever to one institution, the U.S. Federal Reserve.' Interesting about Sharma’s piece is that if anything, it revealed the Fed’s growing irrelevance....Sharma provided readers with the too-often-forgotten truth that alongside the Fed’s quantitative easing (QE) experiment in which it sought to 'inject dollars' into the U.S. economy, 'tens of billions flowed out of the country every month.' And that’s the point. It’s exactly what I argued in my recently released book, 'Who Needs the Fed?' While the central bank can pay interest on reserves held by banks at the Fed only to inject those reserves into other banks through bond buying, it cannot drive dollar lending in an economy that doesn’t rate the lending....What’s important is that a central bank is not required to maintain currency stability. Not only is the Fed irrelevant in light of Sharma’s correct point about the dollar as the world’s currency, Sharma’s very own statistics on money flows remind us that the Fed’s ability to influence much of anything in the United States - and by extension, globally - is in rapid decline."

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8.10.16 - Dead Banks Walking

Gold last traded at $1,351 an ounce. Silver at $20.17 an ounce.

NEWS SUMMARY: Precious metal prices were lifted Wednesday by safe haven buying as the U.S. dollar weakened. U.S. stocks fell as investors digested falling oil prices and quarterly results from retail firms.

Gold and silver extend midweek advance as dollar drops -Marketwatch
"Gold futures tried for back-to-back gains on Wednesday, finding traction as the dollar floundered against chief rivals and some traders bet on a potential rise in Asian demand for the yellow metal....Also supportive for gold prices, Chintan Karnani, chief market analyst at New Delhi-based Insignia Consultants, said he is bullish on both gold and silver, and expects to see a rise in physical demand for the metals....The near-term challenge for the precious metal is a 'stronger dollar and positive risk sentiment on back of upbeat U.S. data,' said UBS strategist Joni Teves, in a note to clients....'We would regard any further weakness up ahead as a potential buying opportunity, given our view that the macro story remains intact,' she said."

hourglass Deutsche Bank teetering on edge of Crisis, Angela Merkel warned -Express
"A top economist has warned that Germany's biggest bank is teetering on the edge of crisis and they only way to protect it against future shocks is to nationalize it. Martin Hellwig said stress tests carried out by the European Central Bank revealed the Deutsche Bank would be left in a precarious position in the event of another financial crisis....He said: 'Putting it short: for a long and serious crisis there simply wouldn't be enough money.'....He said: 'Turning banks into community property through public funds is not only possible but also necessary. If a bank is no longer able to help itself, the federal government should take on shares and exercise the related control functions.'"

According to DON'T BANK ON IT! author Craig Smith, today we face "Dead Banks Walking." The modern fractional reserve banking model is fatally flawed, warns Smith. Now is the time to move to safer havens. Read our free Executive Summary to get prepared for what's coming next.

Central banks are printing money as though the global economy is in freefall -Quartz
“Central banks around the world are now spending $200 billion a month on emergency economic stimulus measures, pumping this money into their economies by buying bonds. The current pace of purchases is higher than ever before, even during the depths of the financial crisis in 2009....Alberto Gallo, a fund manager at Algebris Investments, says we are in a state of 'QE infinity' with persistently low growth, low interest rates, and central bank policies that don’t fix things. ‘They won’t ever say they’re out of ammunition, but central bankers are starting to look like naked emperors,’ Gallo wrote in an article for the World Economic Forum."

Sell, sell, sell as monetary policy is a dead duck -CNBC
"Fixed income has absolutely no value and investors should instead prepare for the return of inflation to the global economy, according to Stephen Isaacs, the chairman of the investment committee at London-based alternative advisory firm Alvine Capital....'I think monetary policy is a dead duck and I think bond yields at this level for investors represent absolutely no value and a huge amount of risk. What I would like to focus on is the coming fiscal reflationary trade because I think that is creeping out of the woodwork in many places,' he told CNBC Wednesday."

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8.9.16 - The Worst Economy Since 3,000 B.C.

Gold last traded at $1,346 an ounce. Silver at $19.85 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday on safe haven buying and a weaker U.S. dollar. U.S. stocks traded near flat line amid weak U.S. productivity data and lower oil prices.

Gold and Precious Metals Are the Place to Be -Seeking Alpha
“Over the first seven months of the year, volatility has gripped all asset classes. Stock prices fell by 11.5% over the first six weeks, the dollar has traded in a range that is closer to recent highs than May 2014 lows, and commodity prices have been all over the map, the one consistent theme has been an emerging bull market in gold, silver, platinum and palladium....All four of the major precious metals that trade on COMEX and NYMEX futures exchanges have appreciated in 2016. All signs tell us that precious metals are the place to be but one must be cautious as the lofty levels of these metals could cause some vicious corrections. However, if those corrections come, they will likely be opportunities to hop on board the precious metals freight train which is making a series of higher lows and higher highs.”

In volatile times like these every portfolio needs precious metals for financial safety and peace of mind. Gold's price corrections come and go, but its value as a long-term store of wealth is enduring. Take action now, call Swiss America to discover The Timeless Truth About Gold & Silver.

economy James Grant: Negative Interest Rates Will End... Badly -Zero Hedge
"Negative interest rates are unsustainable and once investors decide to stop paying for the privilege of holding government debt, a banking crisis could result, says James Grant....Sidney Homer and Richard Sylla, the authors of A History of Interest Rates, found no instance of negative rates in 5,000 years. Now there are $11.7 trillion invested in negative-yield sovereign debt, including $7.9 trillion in Japanese government bonds and over $1 trillion in both French and German sovereign debt. Grant posed a tongue-in-cheek question: 'If these are the first sub-zero interest rates in 5,000 years, is this not the worst economy since 3,000 BC?'....To maintain increasingly lower interest rates would require a 'war on cash,' Grant said. He envisions a means by which the Fed would discourage and stigmatize using cash, and ultimately implement an unfavorable exchange rate on physical currency....'The case for gold is not as a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder,' Grant said."

James Grant, founder of Grant's Interest Rate Observer, is perhaps the clearest thinker in today's wacky world of Wall Street analysts. If his many decades of experience tell him negative interest rates are 'unsustainable', it is wise to heed his advice; before the U.S. and global economy crash and burn. If he sees a 'war on cash' as the only step for desperate central bankers, it is wise to prepare now. Start by reading our White Paper: The Secret War on Cash.

The Quiet Death of the American Dream -Daily Reckoning
"American per capita GDP rose an average 2.2% a year between 1947 and 2000. But it’s only averaged 0.9% since 2001, says The New York Times. The McKinsey Global Institute turned up this bitter morsel: Cited in the Times article, it says, '81% of Americans are trapped in an income bracket with flat or declining income over the last decade.'....So if the Fed can’t breathe life into the corpse, what can? Structural changes. 'The key is growth. The problem is we can’t do it by printing money,' explains Jim Rickards. 'The current economic slump is not cyclical; it’s structural. This is a new depression that will last indefinitely until structural changes are made to the economy.'...Absent necessary structural changes, the future may be a marathon run of low growth, stagnating incomes… and the Japanification of America."

The Last Known Gold Mine -Holmes/Seeking Alpha
“Gold is one of the rarest elements in the world, making up roughly 0.003 parts per million of the earth's crust. (For some perspective, one part per million, when converted into time, is equivalent to one minute in two years. Gold is even rarer than that.) If we took all the gold ever mined-all 186,000 tons, from the bullion at Fort Knox to India's bridal jewelry to King Tut's burial mask-and melted it down to a 20.5 meter-sided cube, it would fit snugly within the confines of an Olympic-size swimming pool. The yellow metal's rarity, of course, is one of the main reasons why it's so highly valued across the globe and, for most of recorded history, recognized and used as currency. Unlike fiat money, of which we can always print more, there's only so much recoverable gold in the world. And despite the best efforts of alchemists, we can't recreate its unique chemistry in a lab. The only way for us to acquire more is to dig. But for how much longer? Goldman Sachs analyst Eugene King took a stab at answering this question last year, estimating we have only ‘20 years of known mineable reserves of gold.’....Exploration will surely continue as it always has - though at a much higher cost.”

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8.8.16 - Proof the Fed is Crushing the Middle Class

Gold last traded at $1,341 an ounce. Silver at $19.80 an ounce.

NEWS SUMMARY: Precious metal prices steadied Monday despite a firmer dollar. U.S. stocks drifted lower as investors further digested last Friday's jobs data amid concern over upcoming retail sales data.

Just how wrong were 2016 gold price bears -Mining
"The metal's good run year to date – one of the best performances in decades – has surprised many analysts (and even surpassed some fervent gold bugs' expectations). The 2016 entries for the London Bullion Market Association long running forecasting competition show just how bearish the consensus view was at the beginning of the year. The majority of investment and institutional analysts predicted gold would dip below $1,000 during the course of the year. The winner of last year's competition Bernard Dahdah of French investment bank Natixis, even predicted an average price in triple digits....Some of the big bullion banks including UBS now sees $1,400 before the end of the year (that's Dahdah's revised prediction too) while Credit Suisse and BofA Merrill Lynch have it even higher at $1,500 going into 2017. Dutch bank ABN Amro, another erstwhile ultra-bearish house, revised its forecast to $1,425, adding that a Trump presidency could really see things explode."

The moral of this story: investment and institutional analysts are just as clueless as most other so-called mainstream experts when it comes to predicting the future price of gold. Smart money has been diversifying into gold for many years, regardless of short-term price fluctuations. The good news: it is not too late to shift non-performing assets into physical gold - the safest and best performing asset of 2016. For details about gold's solid fundamentals read our 2016 Gold Report - World Edition.

assets Fed Perpetuated Problem? Fed Study Finds Many Americans Have Negative Wealth -Hedge Eye
"In a late 2010 Washington Post op-ed entitled 'Aiding the Economy: What the Fed Did and Why,' then Fed chairman Ben Bernanke defended the FOMC's zero interest rate policy and quantitative easing saying: 'Easier financial conditions will promote economic growth... And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.'....Nearly six years have passed since Bernanke wrote those fateful words. The supposed 'wealth effect,' brought on by super easy Fed policy, has failed to 'boost consumer wealth' for a significant number of Americans. According to a recently released Federal Reserve Bank of New York study, 15.1% of households in the U.S. population have either zero or negative net wealth....Here's the key chart showing the breakdown of total wealth in the U.S. and the ownership of U.S. financial assets by wealth distribution. As you can see the top 10% of Americans own 84.5% of U.S. financial assets. In other words, debt-ridden families weren't able to participate in the Fed-stoked asset price boom. So much for the wealth effect..."

The Fed's zero-interest policy and $4 trillion in artificial stimulus have further crushed the America middle class. So far ... stagnant wages, skyrocketing debt, currency devaluations and a rising real rate of inflation are the Fed's 21st century legacy. What's next? Find out in our in our 2016 World Money Report.

It's Time To Dump The Unemployment Rate -Investors
"An unemployment rate below 5% is a relatively rare thing. Only twice before in the past 40 years has it dropped that low -- once in the late 1990s during that economic boom, and again briefly in 2006-2007. Yet unlike before, there is little joy in Mudville today. Instead of confidence and optimism, there is only malaise....Signs of gloom abound. The latest IBD/TIPP poll finds that more than a third of adults (37%) think the country is in a recession. Less than half (48%) say that the economy is improving, while 49% say it's not. More than half (55%) are dissatisfied with federal economic policies....Put simply, what's happened is that the official unemployment number has grown increasingly useless as a reliable economic indicator, for the simple reason that millions of people have simply quit looking for a job."

Stocks a Screaming Buy in Fed Model That May Never Prove Right -Bloomberg
"It’s getting harder for bulls to justify the lofty valuations in U.S. stocks, and one of the last arguments left, that equities are actually cheap when compared against bonds, is increasingly being called into question....The problem for investors is that values have diverged for so long now that it’s possible something has fundamentally changed -- and that may keep stocks from rallying as much as they would otherwise....The Fed model fares poorly compared with simpler methods of judging when stocks are attractive....'Two out of three of the ways the equity risk premium can revert are generally negative for stocks,' said Bank of America’s Suzuki."

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8.5.16 - Gold and Economic Freedom Inseparable

Gold last traded at $1,344 an ounce. Silver at $19.81 an ounce.

NEWS SUMMARY: Precious metal prices dipped Friday as the dollar rebounded and short-term speculators took profits following upbeat July jobs data. U.S. stocks cheered the unexpected rise in jobs, despite lower oil prices.

Here's what the real unemployment rate looks like -CNBC
"The U.S. unemployment rate remained at 4.9 percent in July, the Labor Department said Friday. But relying on that one number as an indicator of the job market is an oversimplification of the complicated world of employment....Most economists look past the official unemployment rate - also known as the 'U-3' number- to other metrics that provide other views of the state of jobs. One of those figures is the U-6 rate, which has a broader definition of the unemployed. That rate rose slightly in July - to 9.7 percent....One area of concern in recent months has been the labor force participation rate, which measures what portion of the population is employed or looking for work....In July, the participation rate was up a tenth of a percentage point to 62.8 percent. "

Greenspan What's wrong with the economy can be summed up in one word -CNBC
“In a recent interview, former U.S. Federal Reserve Chairman Alan Greenspan (the ‘Maestro’) warned that the economy was experiencing, ‘the early signs of stagflation.’ ....In fact, the U.S. economy—and indeed the entire developed world - is in the beginning stages of an unprecedented breakout of stagflation. The number one reason for this can be summed up in a single word…debt. Debt not only steers an economy towards low growth but it also mires the nation with inflation. Global debt increased to more than $200 trillion, nearly three times the size of the entire global economy, and that number is from 2014, the most recent available. All this debt engenders the stag part of stagflation because it is difficult to grow and invest for growth in an economy under such high debt burdens. The baneful part of this worldwide debt buildup is that it didn't lead to the accumulation of capital goods for the purpose of expanding productivity. Instead, it was spawned for the fruitless Keynesian ruse of what amounts to not much more than hole digging and filling.”

Alan Greenspan's call for stagflation appears to be spot on, just as his logic for owning gold written a half century ago, was spot on. "This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." -1966 White Paper-Speech

We are all Keynesians now, so let's get fiscal -Pritchett-Evans/Telegraph
"The Bank of England has done everything possible under the constraints of monetary orthodoxy to cushion the Brexit shock. It is now up to the British government to save the economy, and the sooner the better. Monetary policy is close to the limits. The Bank’s pre-emptive £170bn stimulus package is brave – and unquestionably the right thing to do in these dramatic circumstances – but it is not an economic bazooka and much of the boost will leak into asset price inflation....'We need the stimulus right now. This situation is analogous to the crisis in 2008,' said former rate-setter Danny Blanchflower....This is the exact opposite of post-war orthodoxies, but the cult of central bank independence was always a fair weather illusion. We are all Keynesians now....All the elements of stimulus are coming together: a super-cheap exchange rate, super-easy money, and soon fiscal largesse."

Massive Majority Of Europeans Disapprove Of EU Handling Of Refugee Crisis -Zero Hedge
"When the history books are finally written, I believe the tone-deaf handling of the refugee crisis by EU bureaucrats will be seen as one of the primary catalysts in the ultimate disintegration of the European Union....A spring 2016 Pew Research Center survey conducted across 10 EU member states following the EU-Turkey agreement found that majorities in each country disapproved of how the EU was dealing with the refugee issue. Disapproval was generally greatest in countries with the highest number of asylum seekers in 2015. For example, 94% of Greeks and 88% of Swedes said they disapprove of how the EU has handled the refugee issue....At the same time, half or more in eight of the 10 EU countries Pew Research Center surveyed this spring believe that incoming refugees increase the likelihood of terrorism in their country."

Regarding the impact of 10,000 Syrian refugees arriving in America this year, Swiss America Chairman Craig R. Smith writes, "Clearly one of the most compelling reasons to bring any refugees into one’s country is to fulfill a humanitarian calling and live up to our shared responsibility as global citizens. But in doing so, we cannot deny the burdens that will be placed upon the American tax payer or the weight that will be carried by local support services in a time of ballooning federal, state and municipal debt and historically weak GDP. We also cannot deny the ongoing risk of terror intrusion and the very real threat of a radical belief system that would not stop short of infiltrating the ranks of displaced women and children in order to spread their evil ideology to the West"

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8.4.16 - Banking Mess Prompts Global Cash Hoarding

Gold last traded at $1,367 an ounce. Silver at $20.44 an ounce.

NEWS SUMMARY: Gold prices rose Thursday on safe haven buying after fresh BOE stimulus ahead of Friday jobs report. U.S. stocks languished near flat line as investors await fresh employment data.

The Economic Impact of Syrian Refugees in America -Craig R. Smith
An Economic Burden or a Potential Boon? With some 6.5 million Syrians now displaced, the latest Middle East refugee crisis is being called the worst humanitarian calamity of our time. More than 250,000 people have been killed and millions of Syrians have been forced from their homes and are now flooding the world’s borders. Where have they gone? What is the fallout? What are the costs of hosting, housing and feeding them? And what is the economic impact to those countries and communities that are now contending with one of the greatest immigration challenges of our time? Full story

Learn about the economic fallout of various government decisions by reading Swiss America's 2016 RESEARCH REPORT SERIES providing all you need to know about Gold, Silver and Paper Money.

US poised to hit Obama's target of 10,000 Syrian refugees -Associated Press
"State Department totals show that 2,340 Syrian refugees arrived last month in the United States. That's more than what occurred during the entire seven months after President Barack Obama directed his team to prepare for 10,000 admissions from the war-torn country. Total admissions for the current budget year now come to about 7,900, and the vast majority of them are Sunni Muslims, records show....Rep. Vern Buchanan, R-Fla., sent a letter to Obama on Thursday calling on him to stop accepting Syrian refugees as a matter of national security. 'We are seeing a clear pattern in which a number of recent attacks have been carried out by ISIS terrorists with ties to Syria,' Buchanan said."

dontbankonit Europe’s Biggest Banks Are More Messed Up Than the U.S.’s -Fortune
"It could be a trillion dollar problem....The European banks are in grave danger. That’s true not in just the most troubled economies such as Italy and Greece, but in stalwarts Germany and France as well. And while the timing is unpredictable, the outcome isn’t. Europe’s lenders will eventually have to issue hundreds of billions of euros in equity at severely-discounted prices, clip bondholders with a severe haircut, and force governments to provide gargantuan bailouts....Unless Europe stops kicking, the can’s headed for a cliff."

Think your money is safe in the bank? "DON'T BANK ON IT!" was Craig Smith's response in his widely praised 2014 book. The modern banking system is doomed, warns Smith. Your best option is to find safer havens which offer; liquidity, worldwide acceptance and, most importantly, a time-tested store of value - rather than negative interest rates. Read our free 32-page Executive Summary and get prepared - before the next banking domino falls and starts a worldwide cascade of panic.

Gold futures moderately higher after Bank of England rate cut -Marketwatch
"Gold prices climbed Thursday following the Bank of England’s decision to cut interest rates for the first time since 2009 and unveil a batch of stimulus measures aimed at stimulating the country’s economy in the wake of the June 23 vote to exit the European Union....Gold gathered steam early in the session after the U.S., jobless claims rose to the highest level since the end of June, though claims are still below historical averages and analysts’ expectations polled by MarketWatch, which suggests a healthy labor market. The jobless-claims report comes ahead of the closely watched jobs report on Friday, which will be pored over to determine U.S. labor-market conditions."

Another day, another reason to own gold. What ARE you waiting for? Take action now to discover The Timeless Truth About Gold & Silver.

Brits Are Hoarding Cash Post-Brexit At Fastest Rate Since 2009 -Zero Hedge
"Households may have started to hoard their cash, with new figures showing that the amount of money being kept outside Britain's banking system is now rising at the fastest rate since the financial crisis....The rate at which households and businesses built up holdings of UK banknotes and coins rose above 8% a year for the first time since 2009, according to a Sky News analysis of Bank of England statistics....The sharp increase in the amount of notes and coins outside the banking system is likely to sound an alarm for economists, some of whom have warned that with interest rates at record lows, there is diminishing incentive for consumers to leave their money in bank accounts, prompting them to hoard their money at home."

Citizens worldwide are waking up to what might happen under “Financial Martial Law,” as former Congressman Ron Paul warns. In an interview with The Daily Crux Dr. Paul reminds readers, "Nothing is more dangerous than a broke and desperate government, when it comes to your money. And no government has ever owed more than America does today." For this reason it is vital our readers get and read our free 12-page White Paper: The Secret War on Cash.

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8.3.16 - Is a Recession Looming?

Gold last traded at $1,364 an ounce. Silver at $20.47 an ounce.

NEWS SUMMARY: Precious metal prices consolidated recent gains Wednesday as the dollar firmed. U.S. stocks traded slightly higher on weak investor sentiment, oil volatility and corporate earnings.

Big players buying gold -CNBC
"It's not just Olympians who will be going for the gold this month. Bill Gross is bullish on gold, and he's got plenty of company in 2016. In a turbulent market, or worse still, a sputtering financial system, the precious metal becomes that much more precious in a market offering less and less in the way of yield. Gross voiced concerns about the financial system, economy and persistently low interest rates when he talked up gold in his August letter to investors. 'Not immediately, but at the margin, low/negative yielding credit is exchanged for figurative and sometimes literal gold or cash in a mattress,' the Janus Capital Group fund manager said in a note Wednesday. 'When it does, the system de-levers as cash at the core, or real assets like gold at the risk exterior, become the more desirable assets.'....The rising chance of investors taking either negative returns or outright losses across a number of asset classes makes real assets more valuable right now, Gross said."

Bill Gross, Stanley Druckenmiller, George Soros and Jeffrey Gundlach are all bullish on gold in 2016 because they understand Economics 101: Rising global demand coupled with falling supplies equals higher prices. Don't wait another day to diversify a portion of your assets into "real money". If you need more specific reasons, please read our 2016 Gold Report - World Edition.

Bear Market Warning Looms In The GDP Data -Zero Hedge
"On Friday July 29th, 2016, the Bureau of Economic Analysis (BEA) released the second-quarter GDP figures and revisions for prior quarters. At a disappointing annualized growth rate of only 1.20%, second quarter GDP widely missed consensus expectations of 2.50% growth. Coincidently the current 1-year average growth rate has risen at the same 1.20% and that annualized growth rate has declined for five quarters in a row....For the most part, the recent bout of stagnant GDP data has not caught the attention of the media or the markets....The graph below plots average 1-year GDP growth on a quarterly basis going back to 1948. Here are four important takeaways: 1. All recessions since 1948 started with an average growth rate greater than the current 1.20% rate. 2. There are only three instances where the 1-year growth rate was below the current level and recession did not occur. In the two most recent instances (2011/2012), weak growth was met with renewed rounds of extraordinary stimulus in the form of quantitative easing (QE). 3. Only 18% of all observations going back to 1948 are below the current 1.20% level. 4. Of that 18%, 94% occurred during or within a quarter of a recession....Though difficult in a world of poor returns, equity investors should remain defensive and highly concerned by the recent economic data."

GDP chart

Significant Gains Still In Store For Gold -Market Anthropology
"The prospects for precious metals remain attractive, as we believe the initial move lower in the dollar this year sets up a much larger breakdown headed into Q4 and 2017. Historically, the dollar still appears significantly stretched, which trended to a performance extreme last year as the Fed moved off ZIRP and as rate hike projections peaked. For the US dollar index, a break below 93 would begin the next phase of a large retracement move, which should coincide with lower real yields and higher precious metals prices....Moreover, from a historic cyclical perspective, the broad top potential in the dollar now aligns structurally with the explosive and final retracement declines in real yields around 1978 and 1946, respectively. Should history repeat, we would expect new highs for both gold and silver as real yields plum the cycle low."

Revealing the Real Rate of Inflation Would Crash the System -Charles Hugh Smith
"The grim reality is that real inflation is 7+% per year....What would happen if the real rate of inflation was revealed? The entire status quo would immediately implode. Consider the immediate consequences to Social Security, interest rates and the cost of refinancing government debt....Here are a few of the consequences: 1. Social Security beneficiaries would demand annual increases of 7+% instead of zero or near-zero annual increases....2. Global investors might start demanding yields on Treasury bonds that are above the real rate of inflation. ...3. Private-sector interest rates would also rise, crushing private borrowing....4. Any serious decline in private and state borrowing would implode the entire system....Who's being destroyed by 7+% real inflation? Everyone whose income has stagnated and everyone who depends on wages rather than assets to get by--in other words, the bottom 95%."

Mr. Smith's estimation of 7+% inflation is in agreement with's estimation, which includes the items the government has gradually removed from the CPI index. We agree with Henry Ford's sentiment, "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." One day the true rate of inflation will be revealed and on that day it will send gold prices intro the stratosphere.

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8.2.16 - Gold hits 2-Yr High, Stocks Struggle

Gold last traded at $1,372 an ounce. Silver at $20.70 an ounce.

NEWS SUMMARY: Precious metal prices touched 2-year highs Tuesday as the dollar fell on falling Fed rate hike expectations and slow economic growth. U.S. stocks fell for a seventh day amid global growth and bank worries based on weak earnings and falling oil prices.

Why China and Russia are buying so much gold -Marketwatch
"Adding gold to official reserves protects Beijing, Moscow against dollar dominance. The good news for gold enthusiasts is that China and Russia, the world’s No. 1 and No. 3 producers, are catching up to the big industrial countries in stocks of bullion in their official reserves....Beijing and Moscow are building up gold stocks for a variety of reasons, ranging from unease about undue dependence on the dollar to distaste at the low or negative returns on Europe currency holdings, especially the euro....China seems to be following a more strategic campaign to counter the weight of the dollar, embodied by its successful multiyear bid to bring the yuan the International Monetary Fund’s special drawing right....Deflationary pressures across many advanced and developing economies raise the importance of gold as a store of value and a hedge against financial market instability."

Is the US dollar's world dominance over? Today's climate of monetary globalization - along with overtures from the UN and the IMF - does not bode well for the lasting supremacy of the dollar or the single currency reserve system as a whole, as we explain in our 2016 World Money Report

gold Gold hits 2-year high as dollar crashes to new lows -Investing
"Gold prices rose sharply in North American trade on Tuesday, reapproaching the strongest level since March 2014 as investors continued to push back expectations of a rate hike from the Federal Reserve in the next few months....The dollar has been under heavy selling pressure in recent sessions amid waning expectations that the Federal Reserve will raise interest rates anytime soon after data showed the U.S. economy grew much slower than expected in the second quarter. Fed funds futures are currently pricing in just an 15% chance of a rate hike by September....For the year, prices of the yellow metal are up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus."

Five biggest risks for markets in August -Telegraph
"August is usually the most torrid month for the markets. From the credit crunch to the eurozone crisis, it has carved out a reputation as the month when markets wobble, and any fissures that have lain buried in the economy suddenly crack wide open. So what might cause the markets to panic this year? A fresh blast of quantitative easing in the UK, a looming Trump presidency and a closure of the Shanghai bourse seem the most likely candidates....Here are five to watch for. 1: The Bank of England relaunches QE....2: A Trump surge....3: A unicorn fund-raising disappoints....4: A German bank fails....5: The Shanghai market shuts."

Deutsche Bank & Credit Suisse kicked out of STOXX index -DW
"Germany's largest lender, Deutsche Bank, is dropping out of the STOXX Europe 50 index of leading European companies by market capitalization. The bank has seen a dramatic fall in its share price of late. Two of Europe's largest lenders, Deutsche Bank and Credit Suisse, will be forced to leave the STOXX index of the Continent's top 50 blue-chip companies as of August 8, following a drastic decline in both banks' share value....A recent health check by the European Banking Authority (EBA) saw Germany's biggest bank among the 10 out of 51 European lenders worst suited to weather another financial crisis. Officials pointed to what they viewed as the bank's insufficient capital base, with the lender still reeling from huge litigation costs."

Europe's biggest banks are in big trouble post-Brexit. When the banking dominoes start falling, it will be too late to protect your money - as we explained in our 2014 book, Don't Bank On It! Capital controls are already being put in place to prevent bank runs. Get the full story in our 12-page White Paper: The Secret War on Cash.

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8.1.16 - Stagnant Growth and Rising Prices

Gold last traded at $1,359 an ounce. Silver at $20.50 an ounce.

NEWS SUMMARY: Precious metal prices inched higher Monday on rising uncertainty. U.S. stocks traded mostly lower amid falling oil prices and declining economic growth expectations.

'Stable Money' Means Gold Money -Forbes
"'Stable money' means money that doesn’t change in value. In practical terms, this has always been achieved, as closely as has been possible, by linking the value of the currency to gold and silver, and finally, in the late 19th century, to gold alone. This was true for literally 5,000 years, from about 3200 B.C. to 1971. There has never been a 'stable money' system of any significance, which was not a gold standard system....'Unstable money' and 'currency chaos' have always been a hard sell. For over 100 years now, the funny-money promoters have been selling their ideas as versions of 'stability.' This continues to the present day. Don’t be fooled....What do all these claims of 'stability' have in common? They are all excuses for periodic devaluations and floating fiat regimes. None of them even attempts to do what a gold standard system does - ensure stability of currency value - in a better or more improved way. In the end, it amounts to rhetorical tricks; or what, more unkindly, might be called propaganda."

If you are seeking to add stability to your savings and investment portfolio, then you need to add gold - the world's most trustworthy store of value. For the details of why gold is so vital now, please read our 2016 Gold Report - World Edition.

Consumer Prices Have Soared 160% Since 2001 -Zero Hedge
"According to official statistics, inflation has reduced the purchasing power of the dollar by a mere 6% since 2011: barely above 1% a year. We’ve supposedly seen our purchasing power decline by 27% in the 12 years since 2004 - an average rate of 2.25% per year. But our real-world experience tells us the official inflation rate doesn’t reflect the actual cost increases of everything from burritos to healthcare. The cost of a regular taco was $1.25 in 2010. By official standards, it should cost a dime more. Oops - it’s now $2 each, a 60% increase, six times the official rate....Well, how about public university tuition? University of California at Davis: 2004 in-state tuition $5,684, 2015 in-state tuition $13,951. That’s an increase of 145% in a time span in which official inflation says tuition in 2015 should have cost 25% more than it did in 2004, i.e. $7,105....As for healthcare: feast your eyes on this chart of medical expenses. According to official inflation calculations, the $12,214 annual medical costs for a family of four in 2005 “should cost” $14,963 today in 2016. Oops - the actual cost is $25,826, $10,863 higher than official inflation, which adds over $100,000 in cash outlays above and beyond official inflation in the course of a decade."

While central bankers fret over too little inflation, consumers are already facing too much real-life inflation. Today investors are attempting to walk up a down escalator as negative interest rates sweep the world. Meanwhile, gold prices are up threefold since 2001 compared to the dollar; further proof the buck is much weaker than official figures suggest. Now is the time to convert paper assets into real money assets, which have a long history of outpacing the rising cost of living.

inflation chart

Silver - Once and Future Money -Rickards/Daily Reckoning
"Despite the advent of banking, notes, and fractional reserves, gold and silver retained their core role as world money....Silver’s popularity as a monetary standard was based on supply-and-demand. Gold was always scarce, silver more readily available....If Hillary Clinton wins, that probably means a pick-up in Senate votes for Democrats and a bipartisan infrastructure spending bill. If Donald Trump wins, he has already promised massive infrastructure spending, starting with 'The Wall.' Either way, we’re looking at more spending, bigger deficits, more money printing and, eventually more inflation. The market’s anticipation of this outcome, starting in mid-November, will be a powerful tailwind for silver."

We agree, silver presents an excellent buying opportunity this year for many reasons which are detailed in our free 2016 SILVER REPORT - The Global Metal.

Central Bankers Double Down on Insanity -Grey Owl Capital
"It’s the Central Bankers' market; we’re all just livin' in it. As of the end of June 2016, the world’s four major central banks (the Federal Reserve, the European Central Bank, the Bank of Japan – BOJ, and the People’s Bank of China – PBOC) had expanded their asset totals to $17.2 trillion dollars....The impact of recent central bank actions has been particularly acute in the prices of sovereign debt. In last quarter’s letter, we presented a graphic showing the almost $8 trillion in global sovereign debt that traded at negative yields. As we wrote then: 'That is correct – borrowers are paying to hold securities issued by Japan and fifteen European countries.' Well, the weird got weirder. Today, sovereign debt trading at negative yields tops $16.8 trillion dollars....Central bankers’ insistence on doubling down on insanity, increasing the stakes, will eventually lead to an economic catastrophe greater in magnitude than the great recession of 2008."

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